PASADENA, Calif. – A federal appeals court heard arguments yesterday in a case that highlights the disarray in the FBI’s counterintelligence efforts against China during the 1990s.

A three-judge panel of the 9th Circuit Court of Appeals took up the case of a fired FBI agent, Denise Woo, who is accused of disclosing the existence of a national security investigation to one of the targets of the probe.

Ms. Woo was indicted in 2004 on charges she lied to investigators, exposed a Foreign Intelligence Surveillance Court wiretap, and disclosed the identity of a covert agent or source in violation of the Intelligence Identities Protection Act of 1982. The latter law has been the subject of wide discussion recently because it lies at the core of an investigation into the alleged disclosure of the identity of CIA officer Valerie Plame by White House staffers.

The controversy before the judges yesterday stems from the fact that Ms. Woo signed an agreement to enter guilty pleas in the case but later changed her mind. Prosecutors want to tell the jury at Ms. Woo’s trial what she admitted as part of the plea deal. Her attorneys persuaded the district court judge in Los Angeles, R. Gary Klausner, that her admissions should not be used against her since the plea was never entered.

A full trial could be embarrassing for the government, not only because a former FBI agent will be in the dock, but because a senior agent who oversaw the investigation that Ms. Woo allegedly compromised, James Smith, was a central figure in the biggest scandal ever to hit the bureau’s Chinese counter-intelligence operation.

For years, Smith carried on a sexual relationship with a double agent he was overseeing, Katrina Leung. She eventually gained access to classified materials in his possession. Smith pleaded guilty to a felony false statement charge in 2004. He was sentenced to probation and three months home confinement. Leung also received probation after pleading guilty to a tax charge and lying. To make matters worse, Leung was also having a secret affair with one of the FBI’s top Chinese counterintelligence officials, William Cleveland, though he was never charged with a crime.

Ms. Woo’s attorneys have argued that her case and Leung’s are related. Prosecutors say there is no substantive connection.

A prosecutor, George Cardona, told the appeals court yesterday that Ms. Woo’s plea deal should be enforced like any other contract. “The defendant here elected to break her agreement,” he said.

An attorney for Ms. Woo, Michael Camunez, said the agreement had no effect until the plea was entered. “A defendant can’t waive her right to appear before a court and for a court to determine there’s a factual basis for a plea,” he said. “The parties cannot contract around it.”

Mr. Cardona conceded that the prosecution could not force Ms. Woo to plead guilty, nor could it punish her if the judge chose not accept the plea.

Judge M. Margaret McKeown said allowing a defendant to withdraw her plea didn’t mean much if her plea-related statements would then be used against her. “Your position would force us to say, ‘I can withdraw it, but not really,'” the judge said.

Another judge on the panel, Marsha Berzon, said the agreement between the parties didn’t really address what to do if the defendant changed her mind prior to pleading guilty. “It’s kind of a gaping hole,” the judge said.

A district court judge assigned to the appeals panel, Samuel King, was mute during the arguments, but the other two judges appeared to be inclined to support Ms. Woo’s position.

It is unclear exactly what prompted Ms. Woo to back out of the plea deal. “There was a dispute about the underlying facts,” Mr. Camunez told The New York Sun in an interview after the court session. He declined to elaborate.

Mr. Cardona declined to be interviewed.

While yesterday’s arguments took place in open court, an unusual effort was made to avoid disclosing Ms. Woo’s identity. All the appeals court’s records pertaining to the case are under seal and the court’s calendar referred to the case as “United States of America v. Seal A.” The judges and attorneys generally referred to Ms. Woo as “the defendant,” although at one point Mr. Camunez slipped and referred to his client by name. The reason for the secrecy was somewhat baffling since the trial court unsealed most of its records relating to the case last year at the request of news organizations.

The precise facts that Ms. Woo agreed to admit to as part of her plea deal remain under seal.

The wrangling over the former FBI agent’s case comes as federal prosecutors in Southern California are moving forward with a separate prosecution against three people caught up in an investigation into possible Chinese espionage. Two brothers, Chi and Tai Mak, and Chi Mak’s wife, Rebecca Chiu, were indicted in November on charges they acted as agents for the People’s Republic of China without registering with American authorities.

The suspects were arrested in October as Tai Mak and his wife, Fuk-Heung Li, were about to board a flight to Hong Kong. Prosecutors said Tai Mak was carrying encrypted computer disks he obtained from his brother, who worked as an engineer at a firm that does propulsion research for the military, Power Paragon.

One intelligence analyst, John Pike, said that the allegations conform to the modus operandi for Chinese agents. “I would say it’s consistent with their general priority to go after everything that isn’t nailed down,” said Mr. Pike, who heads a research group, Globalsecurity.org. “The Chinese don’t normally do big intel operations. They tend to be sort of small potatoes,” he said, adding that the episode with Leung was an exception.

The Maks and their wives were originally charged with conspiracy to steal military information, but that charge was not part of the indictment. The reduced charges are perplexing because court affidavits indicate that the FBI had the group under close surveillance.

One problem for prosecutors may be that the records the Maks allegedly copied were not classified, but simply restricted against foreign dissemination. At a hearing in the case Monday afternoon, attorneys discussed the logistics of reviewing 60,000 pages of evidence, much of it in Chinese.

“None of the Chinese interpreters want to submit for a clearance,” an attorney for Ms. Chiu, Stanley Greenberg, complained in an interview. “This is a case that’s very slow moving in getting off the ground.”